Glucocorticoid hormones are potent inhibitors of skin carcinogenesis in mice. The activity of glucocorticoids is mediated by the known transcription factor, the glucocorticoid receptor (GR). Two major mechanisms of the regulation of gene expression by GR are DNA-binding dependent transactivation, and DNA-binding independent transrepression through negative interaction with other transcription factors. We found that keratin5.GR (K5.GR) transgenic animals in which GR was overexpressed and spontaneously activated in basal keratinocytes and in hair follicles, are resistant to ras-induced skin carcinogenesis both in terms of tumor multiplicity and tumor size. It is well accepted that mouse skin tumors derive from epithelial stem cells (SC) located in the bulge region of the hair follicle. It is also known that tumor promoters activate proliferation of quiescent epidermal SC located in the bulge. Our experiments showed that the number of putative SC in the bulge of K5.GR transgenic mice was almost two-fold less than in littermate controls. We also found that the clonogenic activity of SC-enriched keratinocyties isolated by FACS from skin of K5.GR mice was strongly decreased in comparison to SC-enriched keratinocytes isolated from w.t. animals. We transcriptionally profiled SC-enriched keratinocyties and mouse skin tumors harvested from K5.GR and w.t. mice using gene arrays. Unexpectedly, the expression of 70% of genes whose expression was affected by GR in SC and 86% of genes whose expression was affected by GR in skin tumors was inhibited by GR. These novel results suggest that negative gene regulation (transrepression) plays a key role in GR effects on epidermal SC maintenance and in GR tumor suppressor effects in skin. We propose to prove the hypotheses that (i) alteration of SC status including SC growth potential and sensitivity of SC to tumor promoting stimuli are important mechanisms of the tumor suppressor effect of GR in skin, and that (ii) transrepression activity of GR is critical for its tumor suppressor role. Pertinent to these research goals the Specific Aims are: 1). Define the effect of GR on proliferation of SC induced by tumor promoting stimuli in vivo using genetic and pharmacological approaches;2). Determine the effect of GR on SC growth potential and sensitivity to differentiation in vitro using genetic and pharmacological approaches;3). Identify the role of GR-induced gene transrepression in SC maintenance and in tumor suppressor effect in skin using KS.GRdim transgenic mice. This work is highly innovative because the role of GR and glucocorticoid-mediated signaling in the maintenance of epidermal SC has never been previously addressed. We expect that proposed studies will provide new insights into the maintenance of SC by glucocorticoids which are important physiological and pharmacological regulators of epidermal homeostasis. These studies will also significantly enhance our understanding of the role of stem cells in skin cancer resistance.